PM stirs reforms with labour recipe
Industry wants feel-good props
Infosys logs 14% rise in net profit, dims forecast
Head count to go up
Ranbaxy holds out bonus hope
Videocon sizes up Webel unit
Essar links 10% growth target to consolidation
Cross-country power links planned
Nerolac focus on economy auto segment
Foreign Exchange, Bullion, Stock Indices

New Delhi, July 10: 
Prime Minister Atal Bihari Vajpayee today committed his government to the second stage of reforms — especially the controversial labour reforms — and said he wanted the state to take its heavy hand off the levers of manufacturing through an accelerated programme of privatisation in non-strategic areas.

“The Cabinet has decided to vigorously pursue labour reforms,” Vajpayee told his advisory council on trade and industry which met here today.

The Prime Minister said he had set up a Cabinet committee on economic reforms to develop the ‘priority agenda’ for policy reforms across different sectors each year and to monitor its implementation.

Vajpayee also said about 100 major infrastructure projects had been identified for fast-track implementation. The Cabinet secretary is monitoring progress on this front.

He said it was not enough for the government alone to reform its policies and practices; businesses, too, should reform themselves by adopting principles of good corporate governance.

“Recent reports of accounting scandals elsewhere in the world are beginning to worry a lot of people about the bombshell hidden in the boom-time economy,” Vajpayee said.

On the process of disinvestment, he said: “We will further accelerate disinvestment of PSUs except those in strategic sector. We will relinquish government involvement in production and raise resources for development of our social sector.”

The focus of today’s meeting was on the Electricity Bill and the Petroleum Board Regulatory Bill. Vajpayee said besides these two Bills, the convergence Bill for telecom and IT, the Competition Bill, the Patents Bill, the amendments to the civil procedure code, the Ordinance for securitisation and reconstruction of financial assets and enforcement of security interests were in Parliament.


New Delhi, July 10: 
Industry today urged the government to bring back the ‘feel good’ factor into the economy in order to spur growth.

At a meeting of the Prime Minister’s advisory council on trade and industry, CII president Ashok Soota suggested a four-point agenda to boost exports by information technology firms, manufacturing sector and the service industry.

The meeting was specifically called to discuss reforms in the key sectors of petroleum and electricity. Referring to the Petroleum Regulatory Bill, both Ficci and CII suggested the formation of a task force that would monitor the impediments affecting the two sectors. It is felt that such a convergence would integrate vision.

Both chambers felt that state-level action was the key to power reforms. They emphasised the need to bring tariffs in line with the cost of supply to each consumer class to prevent distortion in prices of electricity.

Ficci said various state governments were levying electricity duty and cess on the consumption and sale of electricity, including captive generation, thereby restricting the scope of the tariff commissions to prescribe cost-based tariffs. It, therefore, suggested the provision of an overriding benchmark that would address this problem.

CII proposed a framework of standard policy, including tariff and user charges, which should be applied across the country. The chamber also wanted a review of the Ordinance on non-performing assets, which, it said, went against all norms of natural justice and is worse than Fera.

Ficci wanted the access to Accelerated Power Development reform programme (APDRP) funds to be made contingent on a state signing on the state electricity board dues settlement scheme.


July 10: 
Belying fears that the global market wobble would batter its bottomline, Infosys Technologies today unveiled a better-than-expected 14 per cent increase in net profit on the back of a 25 per cent growth in sales during the first quarter ended June 30.

Net profit stood at Rs 216.85 crore against Rs 190.03 crore in the corresponding quarter of last year. However, what was remarkable was the leap in total income to Rs 764.62 crore from Rs 612.52 crore in April to June 2001.

The anaemic growth in net profit — when measured against the topline — is evidence of the fact that while volumes were buoyant, margins were under pressure.

Infosys confirmed the trend itself, saying volumes had swelled 12.5 per cent even as prices slid 0.6 per cent over the last quarter. “Even though billing rates were hit, the company achieved better growth in its revenues. This shows an ambitious volume growth,” said an analyst from a local brokerage. Analysts estimated the company’s net profit to be in the region of Rs 212 crore and sales to be close to Rs 700 crore.

“We remain cautious due to delays in client visits arising from adverse travel advisories and due to a challenging global business environment,” CEO and managing director Nandan Nilekani said in Bangalore.

The forecast for income from software development services and products is Rs 762-781 crore for the quarter ending September 30. While EPS is expected to be between Rs 33 and Rs 34 for 2002-03, income is projected to be between Rs 3108 crore and Rs 3195 crore.

S. Gopalakrishnan, chief operating officer and member, of the board said: “Incremental revenue was substantial due to higher project starts, which were predominantly onsite driven.”

The margins were impacted due to increased investment in sales and marketing.

Investors worried about the grey outlook sent the Infosys share tumbling on bourses today. The early-session excitement over healthy numbers was replaced with anxieties over how much sales would suffer. The overnight fall on Nasdaq also hastened the slide.

The scrip opened at Rs 3449, rose by around 2.5 per cent to Rs 3,478, but gave up the gains later in the afternoon to close at Rs 3330.10, down Rs 61.75 over its previous finish.

Infosys said it added 23 new clients in the first quarter compared with 29 in the previous one. That included names such as Bear Stearns, ZKB and National Commerce Bank, Jamaica. Top five clients accounted for 23.6 per cent (27.4 per cent) of its revenues for the quarter, while the top 10 customers contributed 39 per cent.

Progeon, the company’s new business process outsourcing (BPO) subsidiary with 121 employees, added two clients, and generated revenues of Rs 21 lakh.

Cash reserve

There is no plan to return Infosys’ cash reserves to shareholders, Nilekani said. “The cash reserves were strategic and adequate. It would give us flexibility to respond to market conditions. The fact that we have not acquired companies is not negative. We have struck the right alliances,” he said.

Cash and cash equivalents increased by Rs 62.27 crore, from Rs 1,026.96 crore to Rs 1,089.23 crore, after incurring a capital expenditure of Rs 53.79 crore.

Gopalakrishnan said the company was looking at opening a representative office in China in the near future. Infosys, which initially announced plans to set up a software development centre at Shanghai, has recently said the proposal has been kept on the backburner.

Gopalakrishnan today said “China is a market for us...a potential location. We are requesting for information on setting up the centre and other parameters. We are yet to get the complete data. So, there has been a delay. Now, we are looking at opening a representative office in China in future.”

Phaneesh Murthy, head (sales and marketing), said the recent US travel advisories following escalating tension on the Indo-Pak border had not affected performance in the first quarter, but said the impact might be felt in the next couple of quarters.

“We had no visitors in June, but now they are trickling in,” Nilekani said, adding that the continued challenging economic environment and accounting scandals in the US had not helped matters.


Mumbai, July 10: 
Here’s what will boot up wannabe computer programmers — Infosys Technologies says it wants to hire 1,000 people in the three months to September.

That announcement came hand in hand with the information that the company had 11,304 hands on June 30, a significant increase from 10,738 on March 31.

The Bangalore-based infotech major revive the recruitment process that had been suspended last year.

“All recruitment offers that had to be deferred last year due to business reasons have been honoured this year. The new people will join the company in batches during this quarter and the next. “We have fulfilled our commitment to these recruits,” said S. D. Shibulal, head (customer delivery) and member on the board. The company says it is offering jobs at all levels even now.

Starting this month, Infosys has switched to a role-based salary structure that is aligned more closely to performance.


New Delhi, July 10: 
Ranbaxy Laboratories Ltd, the pharmaceutical major, has called a board meeting on July 18 to discuss a bonus issue.

Senior vice-president Bimal K. Raizada said the board meeting would also consider the financial results for the second quarter ended June 30.

“The last time that Ranbaxy made a bonus announcement was in 1998 when it offered free shares at a ratio of 1:1,” Raizada told The Telegraph.

The news of the bonus issue propelled the Ranbaxy scrip to the day’s high of Rs 934 on the Bombay Stock Exchange after it opened at Rs 904. However, the scrip could not sustain the gain and it dropped to an intra-day low of Rs 900.40 before closing at Rs 912.35, a gain of Rs 9.25 over its previous close of Rs 903.10.

Ranbaxy has had a pretty good year and reported a sales turnover of Rs 552.9 crore in the first quarter with a net profit of Rs 94.9 crore. For the year ended December 2001, Ranbaxy reported a turnover of Rs 2,054 crore; it had global sales worth $ 600 million.

“Ranbaxy has paid a bonus every five to six years,” said Raizada. The previous bonus issues were in 1998, 1992, and 1986. “The last time that Ranbaxy raised money from the market was in 1986,” said Raizada.

The size of this year’s bonus issue will depend on the financial results and other financial parameters, he said.

The Ranbaxy spokesperson said that in terms of financials the going has been good. “The international market has been doing very well. The going has also been good in terms of the development of new molecules,” the spokesperson added.

Ranbaxy has been planning to enter into strategic alliances or go in for acquisitions while foraying into the OTC and herbal markets. The plan is to first launch OTC products and then extend the basket through select herbal products. In the first phase, Ranbaxy is setting up a sales and distribution organisation across India. Subsequently, it plans to expand the ‘consumer healthcare business’ to other countries in a phased manner

WHO approval

Ranbaxy today announced that its anti-AIDs drugs, Zidovudine 300 mg tablets, Nevirapine 200 mg tablets, Lamivudine 150 mg tablets and Lamivudine 150 + Zidovudine 300mg tablets have been granted approval by the World Health Organisation (WHO). These products are now under the purview of WHO approved list of anti-AIDs drugs.

Ranbaxy will now become a pre-qualified supplier of these products to the UN agency. These products will be manufactured at the company’s plant at Dewas (in central India) which has been approved by WHO, US-FDA, UK-MCA, S. Africa-MCC, and Australian-TGA.

Ranbaxy has developed a range of generic Anti Retrovirals (ARVs). It markets its anti-AIDs products in several countries. African governments have shown a keen interest in sourcing ARVs from Ranbaxy.


Calcutta, July 10: 
The West Bengal government has approached the Videocon group with a proposal to sell Webel Consumer Electronics, Webel’s loss-making subsidiary that manufactures televisions.

Sources said a formal proposal has been sent to Videocon from the West Bengal Industrial Development Corporation.

Videocon Group president P. N. Dhoot has assured the state government that it will help turn around the unit. “He has agreed to carry out a due diligence,” sources said.

The evaluation has already started and a report is expected in two to three weeks. “Based on it, Videocon will decide whether to take over management control or offer expertise for the unit’s recovery,” sources said.

Webel Consumer Electronics, earlier called Webel Nicco, has been losing money. “The West Bengal government is in a dilemma on whether to continue operations or to stop work. So, they wanted to give it a last try and approached Videocon. We are optimistic that the firm will come up with a concrete proposal. They are interested in Bengal,” sources in the ministry said.

The move is seen as part of the government’s strategy to either turn around loss-making units or close them.

Webel Consumer Electronics manufactures 4,000 to 5,000 television sets per month on a contract basis. “At this level of production, it has become increasingly difficult to carry on with the operations of the company. We need to find an alternative,” ministry sources said.

Videocon intends to invest Rs 100 crore in an appliances unit, next to its colour television factory at Salt Lake. The facility, expected to be up and running in four to five months after construction starts next week, will make washing machines and refrigerators under the Videocon brand name.

Videocon International had bought the Salt Lake colour television manufacturing unit as a going concern from Philips India for a consideration of Rs 9 crore in December 1999. The buyout was executed through Kitchen Appliances, Videocon International’s subsidiary. The company took control from January 2000.

Following its takeover, Videocon has increased the productivity of the unit substantially. At present, the unit manufactures 50,000 CTVs per month. The unit rolls out CTVs under Videocon, Sansui and Akai brand names. Air-conditioners are manufactured under the Kenstar brand name.

“Industrial relations at the factory have improved following Videocon’s takeover. In fact, there is no problem with the employees. With the same 300 people, we have been able to increase the productivity of the factory substantially,” senior officials of Videocon said.

Sansui, the Japanese electronic major, has identified the Salt Lake factory as a major centre from where it would source CTVs. Videocon has the manufacturing and marketing rights for Sansui’s CTVs in India.


Mumbai, July 10: 
It is time for consolidation and growth at Essar, the Rs 4700-crore diversified group of the Ruias. The group, which has interests in shipping, oil, power, telecom, steel and construction, is drawing up plans to grow at 7-10 per cent rate per annum in order to carve out a niche for itself in the domestic market.

Says Essar director Prashant Ruia, “The task ahead is to consolidate ourselves in the sectors we are operating in and push up growth to increase shareholders’ value.”

While the major growth drivers will be shipping, oil, telecom and construction, the other two sectors — power and steel — are also expected to make substantial contribution to the overall group turnover.

The consolidation process, which is expected to see some major corporate and financial restructuring exercises involving most of the group companies, has already been kicked off.

Ruia is hopeful that the exercises will be completed very soon in order to take a leap forward.

The group’s shipping business, for instance, is the second largest operation in the country having 35 ships which comprise 14 per cent of the domestic shipping fleet.

The shipping outfit, which is vying for the government stake in Shipping Corporation of India, has already established itself as a major crude carrier in the world. Over 2 per cent of the US total crude imports is carried by Essar Shipping and the company is trying to increase its overall market share by providing value added services like logistics. It is also setting up, through a 100 per cent subsidiary, a 32 million tonne crude terminal at Vadinar in Gujarat with an investment of Rs 1874 crore.

Ruia said the shipping business has a great synergy with the group’s oil business, which is setting up a 10.5 million tonne refinery in Gujarat.

In fact, except telecom, the other businesses are all inter linked with one another so as to provide greater freedom in operation.

The group’s 515 mw power plant at Hazira has been set up at Rs 2300 crore not only to avail uninterrupted power supply to its steel plant in the same area but also to provide around 300 mw to the grid.

The power plant can be operated both by gas and naphtha and hence it remains largely unaffected by price fluctuations in any of the two inputs.

Steel, which has pulled down the group’s ambition over the last four years because of unprecedented recession, is now slightly looking up in terms of prices and demands.

Essar Steel, one of the largest hot-rolled manufacturers, is expected to turn the corner shortly if the prices and demand sustain. The group however is negotiating with the financial institutions for an interest restructuring, which, if in place, may see a phenomenal growth in its steel business.

“We are not asking for any fresh loan. Nor do we demand any debt write off. We only seek a reduction in interest rates and a little more time to repay our loans. In the current steel prices, the high rates of interest put a stumbling block for growth,” he said.

The group, however, heavily pegs on the oil and telecom businesses. In oil, besides refinery, Essar Steel is also setting up a country-wide retail network.

“We are coming up with our refinery and retail network at a time when the country hardly has any oil surplus. Even if the domestic oil sector grows by 5 per cent annually, we are comfortable,” Ruia said.

On telecom, Ruia said the group’s partnership with Hutchison has already started paying off with over 1.4 million subscribers.

“Diverse business interests is our strength. Now it is to see how better we can use this strength through our strategy and efforts,” he said.


New Delhi, July 10: 
Power minister Suresh Prabhu is likely to approach the Cabinet shortly to seek approval for an upfront funding of a power transmission highway that will ultimately merge into the national grid.

The transmission scheme for the national power grid will involve the development of high capacity transmission corridor in the Chicken Neck area and the establishment of a ring of 765 kilovolt lines connecting the eastern, western and northern regions. Once these links are completed, the cumulative inter-regional power transfer capacity would increase to a level of about 30,000 megawatts by 2012.

The proposal will also seek Cabinet approval for a strong link between the eastern region and the western and southern regions. Development of a 400-kilo volt alternate current corridor north of the Ganga, a transmission corridor south of the Ganga and an associated transmission system for Hirma are also been planned.

The link between the eastern and western regions will be through a 400-kv double circuit line with series compensation targeted for completion by March 2004. It will also involve evacuation of power from Sipat Mega Thermal Project mainly within the western region and strengthening the western regional grid to enhance the usable capacity of the existing High Voltage Direct Connection (HVDC) link between the western and southern region by 2006.

The Cabinet will also examine the proposal for a 2000-mw HVDC bipole between the eastern and southern regions, the schedule for which has been advanced ahead of the Talcher Stage-II Super Thermal Power Project. The proposal also involves capacity augmentation of the HVDC back-to-back link to the south from 500 mw to 1000 mw by 2004-05.

Additional investment proposal for a 400-kv direct current link between the eastern and western regions and a scheme for associated transmission system for Sipat Mega Thermal Power Project may be placed before the Cabinet.

“An additional HVDC link to the southern region either from the western region with alternate current system strengthening between eastern and western regions or directly from eastern region is also being considered. In addition, an investment proposal for Gazuwaka HVDC back-to-back between eastern and southern region will also be taken to the Cabinet soon,” said power ministry sources.

“A proposal for a 400-kv AC corridor transmission north of Ganga and a transmission corridor south of Ganga will also be placed before the Cabinet with an investment proposal,” sources added.


Calcutta, July 10: 
Paints major Goodlass Nerolac Paints Limited (GNPL) will target the low-end economy automotive sector to drive growth through volumes in the auto refinish segment. The economy segment accounts for almost 35 per cent of the total sales in the refinish industry.

The company has already introduced two brands — GNP-201 and Nova 0151 — for commercial vehicles like taxis, autorickshaws and buses.

“We did not have any product catering to the low-end auto segment. This segment is the largest consumer of refinish products, as they require frequent attention with regards to repair and repainting,” says general manager of the auto refinish divison, Sanjay Patil.

The company expects to capture a market share of 25 per cent by March 2003 as against the 15 per cent share of the Rs 300 crore-refinish industry it currently commands.

GNPL has identified the eastern region as a major area of growth and will focus on raising volume consumption of refinish products in all categories.

“The eastern region has been price sensitive but a developing market. It has been growing at the rate of 30 to 35 per cent for the last two years. GNPL has registered almost 100 per cent growth in all its brands. The east is opening up to premium products and hence we have decided to focus on our growth prospects here,” adds Patil.

The eastern region contributes 20 to 25 per cent of the total turnover of the company.

GNPL has also outlined a loyalty route programme to ensure that car owners identify with the Nerolac brand and stay committed to it.



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